Google Competes for Pipeline to Consumer Homes

ByHoma Zaryouni ·

7 July 2014

At the L2 Amazon Clinic, L2 Founder Scott Galloway said Amazon is looking to build a pipeline to consumer homes by offering everything from luxury products to groceries and television streaming. Fifty-one percent of Amazon’s operating expenses are dedicated to fulfillment (i.e. next-day and same-day delivery, free-two day shipping and easy returns), and the retailer has plans to add close to ten new warehouses near major cities to multiply households eligible for next-day delivery.

But it seems that Amazon isn’t the only one competing for the top spot on consumers’ shopping lists. Google is said to have set aside $500 million to expand its Shopping Express (launched in San Francisco in 2013 without much momentum) to all U.S. cities. Google Express delivers items from local stores to customers on the same day or the next, and charges $4.99 for each store a Google courier visits. Google ads provide an opportunity for cross-promotion; once Google knows more about what each user purchases, it can better target ads.

But can Google beat Amazon in retail? Unlike Amazon, Google Shopping Express operates as a third-party delivery platform that has partnerships with Target, Staples, Whole Foods. While inventory is Amazon’s advantage, Google’s relationship with Whole Foods could be extra incentive for faster expansion of Amazon Fresh.